BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NO. 407

 

DOCKET NO. 180300208

 

ORDER NO. 407-2395

 

TYPE: SPACING

 

REPORT OF THE COMMISSION

 

            The Commission heard this matter on March 19, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to: 1) vacate Order Nos. 407-831 and 407-1089; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 1 and 12, Township 1 North, Range 65 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

FINDINGS

 

The Commission finds as follows:

 

1.         Verdad Resources, LLC, Operator No. 10651 (“Verdad” or “Applicant”) is an interested party in the subject matter of the above-referenced hearing.

 

2.         Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

 

3.         The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

 

4.     On February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) which, among other things, established 80-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Codell-Niobrara Formations.  Sections 1 and 12, Township 1 North, Range 65 West, 6th P.M., are subject to this Order for the Niobrara and Codell Formations.

 

5.           On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Sections 1 and 12, Township 1 North, Range 65 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.

 

6.         On July 29, 2013, the Commission entered Order No. 407-831, which established two approximately 320-acre stand-up drilling and spacing units in Section 1, Township 1 North, Range 65 West, 6th P.M., and approved up to six horizontal wells within each unit, for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formation.  Sections 1 and 12, Township 1 North, Range 65 West, 6th P.M., are subject to this Order.  No horizontal wells have been drilled pursuant to Order No. 407-831.

 

7.         On July 28, 2014, the Commission entered Order No. 407-1089, which pooled all interests in a designated Rule 318A horizontal wellbore spacing unit, consisting of the W˝W˝ of Section 1, and the E˝E˝ of Section 2, Township 1 North, Range 65 West, 6th P.M., for the development and production of the Niobrara Formation, and authorized cost-recovery pursuant to Section 34-60-116, C.R.S., out of the proportionate shares of all nonconsenting owners in the Taoka KF 01-021HN Well.

 

8.         On January 18, 2018, Verdad, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to: 1) vacate Order Nos. 407-831 and 407-1089; and 2)  establish an approximate 1280-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 16 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara Formation, with the productive interval of the wellbore to be located no closer than 460 feet from the eastern, southern  and western unit boundaries, no closer than 480 feet from the northern unit boundary, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, without exception granted by the Director:

 

Township 1 North, Range 65 West, 6th P.M

Sections 1:      All

Section 12:      All

 

Applicant stated that any horizontal wells to be drilled in the unit will be drilled from no more than two multi-well pads on the surface of the drilling unit, or on adjacent lands. 

 

9.         On February 26, 2018, supplemented March 1, 2018, Verdad, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits.  Sworn written testimony and exhibits were submitted in support of the Application.

 

10.       Land testimony and exhibits submitted in support of the Application by Frederick E. Rowe, IV, Land Manager for Verdad, showed that Verdad holds oil and gas leasehold interests and has a right to drill in the Application Lands.  The land testimony also showed that all proposed horizontal wells will be drilled in a north-south orientation.

 

11.       Geologic testimony and exhibits submitted in support of the Application by Andrew Jarrett, Vice President of Exploration for Verdad, showed that the Niobrara Formation is present throughout the Application Lands, is approximately 340 to 350 feet thick, and is generally of uniform thickness throughout the Application Lands. Geologic testimony also showed that the Codell Formation is present throughout the Application Lands, is approximately 15 feet thick, and is generally of uniform thickness throughout the Application Lands.

 

12.       Engineering testimony and exhibits submitted in support of the Application by L. Arthur Beecherl, IV, Vice-President of Operations for Verdad, showed that the drainage area for analog horizontal Niobrara Formation wells are estimated at 88 acres, the drainage area for analog horizontal Codell Formation wells are estimated at 198 acres, and an approximate 1280-acre drilling and spacing unit is therefore not less than the maximum area than can be efficiently, economically and effectively drained by 16 horizontal well producing oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.

 

11.       The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.

 

12.       Verdad agreed to be bound by oral order of the Commission.

 

13.       Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to: 1) vacate Order Nos. 407-831 and 407-1089; and 2) establish an approximate 1280-acre drilling and spacing unit for Sections 1 and 12, Township 1 North, Range 65 West, 6th P.M., and approve up to 16 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.

 

ORDER

 

IT IS HEREBY ORDERED:

 

1.         Order Nos. 407-831 and 407-1089 are hereby vacated.

 

2.      An approximate 1280-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to two horizontal wells within the unit are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:

 

Township 1 North, Range 65 West, 6th P.M

Sections 1:      All

Section 12:      All

 

3.         The productive interval of the wellbore will be located no closer than 460 feet from the eastern, southern  and western unit boundaries, no closer than 480 feet from the northern unit boundary, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.

 

4.         All wells permitted under this Order shall be drilled from no more than two multi-well pads within the Application Lands, subject to Rule 318A, unless the Director grants an exception.

 

5.         All wells permitted under this Order shall be drilled in a north-south orientation.

 

 

IT IS FURTHER ORDERED:

 

1.         The provisions contained in the above order shall become effective immediately.

 

2.         The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

 

3.         Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.

 

4.         An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

 

ENTERED this 3rd day of April, 2018, as of March 19, 2018.

           

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

 

 

By____________________________________

   Julie Spence Prine, Secretary